Diagnostics Market Expanding in Asia

The U.S.$3.2 billion Asian in vitro diagnostics (IVD) market has been the only region experiencing close to double-digit growth over the past few years. An aging population and widening health insurance are the main contributors. However, social, economic, political, and healthcare issues threaten to slow market development. A compound annual growth rate of about 9% is forecast for the overall IVD market between 2003 and 2010 by Frost & Sullivan (Palo Alto, CA, USA), an international consulting firm.

Asia's aging population is expected to double by 2025. Rising life expectancies and more affluence are expected to boost healthcare expenditures. Japan, for example, with the world's third-largest aged population, currently accounts for 90% of IVD revenues in Asia. In other countries, governments are being confronted with the dilemma of reducing healthcare outlays while expanding coverage to all. The popularity of IVD tests is being furthered by their financial and therapeutic benefits.

Lack of proper health insurance in most counties and constrained personal finances have resulted in low levels of consumer spending. In the absence of a strong medical insurance sector, most of the healthcare expenditure is borne by the individuals themselves. It is estimated that 82% and 63% of the total amount spent on healthcare in India and China, respectively, is out-of-pocket spending.

"This is expected to slowly change with private insurance companies increasing their penetration and introducing some kind of healthcare coverage,” noted Raghavendra Chitta, a healthcare analyst with Frost & Sullivan.

By allowing patients to take a more active role in managing their own health, IVD tests offer a cost-effective alternative. If IVD testing is used, patients are more likely to receive suitable treatment and avoid unnecessary and expensive medical procedures. For maximum growth, education of key stakeholders is critical.

In 2003, the largest revenue-contributing segments to the total IVD market in Asia were clinical chemistry (38%) and immunoassay (29%), followed by hematology and microbiology. The fastest growth, however, took place in the molecular biology segment, followed by coagulation and point of care (POC). Increased adoption of nucleic acid tests (NATs) for infectious diseases, viral assays, blood glucose testing (POC), cardiac markers and glucose, coagulation self-monitoring, and bacteriology culture are all set to support increased growth from now until 2010.

Cancer has been overtaking infectious diseases as the leading killer in Asia. This has increased the potential for premium-priced tests for cancer detection, and these are now poised to replace more-conventional testing. Key factors in keeping tests competitive are the cost per test, customer support, ease of use, turnaround time and quality, reliability, and flexibility of tests. Success will also hinge on how companies can manage logistics in the vast Asian continent while tackling the disparities between and within countries there.

"Due to substantial costs in distributing and catering to vast geographical areas, especially in India and China, it is imperative to establish relationships with reputed dealers rather than operating alone,” advised Mr. Chitta. "Focusing on particular geographies one at a time, thereby enabling easier logistics management, forming alliances with different regional distributors rather than a single distributor nationwide, and training local distributors on product and service issues would be vital to continued growth.”


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